Data released Tuesday appear to strengthen industry arguments that lenders do not discriminate against businesses in low-income areas.

Required for the first time by the revised Community Reinvestment Act rules, the information showed that banks and thrifts had made 4.6% of their small-business loans in low-income areas during 1996. Proving this figure is representative, 4.9% of the population live in low-income areas.

The trend held true in even the poorest census tracts. Defined as those where residents make half the median income, these areas received 5.2% of all loans, while comprising 5.7% of all census tracts.

Lenders welcomed the data, saying they should quiet critics who charge banks don't serve small businesses in low-income communities.

"Redlining doesn't exist for business lending," said Catherine P. Bessant, president of the community reinvestment group at NationsBank Corp. "That is what this says."

But Matthew Lee, executive director of the Bronx, N.Y.-based Inner City Press-Community on the Move, discounted the data, saying they include many downtown areas that are not low-income. For instance, the census tract that includes the World Trade Center in Manhattan is defined as low-income.

"Not distinguishing between the areas is disingenuous and not true," he said.

Not surprisingly, banks and thrifts made 40% of their small-business loans to companies in cities and 41% to suburban firms, according to the data. Urban areas make up 38.4% of all census tracts, and suburban areas make up 38.8% of these tracts.

Regulators revised the CRA rules in 1995 to focus more on performance and less on paperwork. Beginning in 1996, banks with more than $250 million of assets and those belonging to holding companies with more than $1 billion of assets had to report the details of their small-business and farm lending.

Overall, 1,744 commercial banks and 334 savings banks made 2.4 million small-business loans worth $147 billion and 216,000 small-farm loans worth $10.4 billion.

Big banks - those with at least $1 billion of assets - dominated the market for small-business loans in 1996, originating more than 60% of loans to companies with less than $1 million in revenue and 42% of loans to farms with less than $500,000 a year in revenue.

This occurred though small banks vastly outnumber their big bank rivals. Of the 2,078 lenders that reported data, 75% had less than $100 million of assets.

Regulators also solicited data on community development lending. Banks made 32,677 of these loans in 1996 worth a total of $17.7 billion. Two- thirds of banks and 46% of thrifts made at least one community development loan, although large lenders dominated the market by making $15 billion in loans.

Industry officials said they will examine the data to find underserved communities. "The data may help lenders target those areas in the greatest need of development efforts," said Michael ter Maat, an economist at the American Bankers Association.

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